Profile - John Hooper: Tackling the challenges as the banks face a very different world

John Hooper likes change and he likes challenge. He got both when Lehman Brothers tipped over in 2008.

He was heading NAB Capital, a wholesale banking business with A$100bn on its balance sheet and 2,500 employees.

“Now we are sitting here in 2011 it is much easier to be sanguine about things than it was in 2008 when nobody really knew how badly damaged the system was going to be and whether the system was going to survive,” said Hooper, 50.

“People were making it up as they were going along a bit and there were large parts of the world’s financial system teetering on the brink.

“It was a very energising time but also a very challenging time.”

Three years later and sitting in a meeting room in the Leeds headquarters of Yorkshire Bank, the investment banker is recalling the credit crunch and its multi-layered consequences as another financial crisis, this time involving governments as well as banks, threatens Europe.

He speaks quickly and precisely, with an accent that wavers between his native Sunderland and Australia, where he spent most of the last decade as an executive at National Australia Bank (NAB).

Being Australian, NAB was better insulated from the crisis than many Western banks, but it still had to write off A$830m in subprime loans and today has to contend with many of the challenges facing the financial services industry as a whole.

“The ability of banks to deliver the service they used to deliver and to do the things they used to do is under pressure and we need to keep talking to our customers and providing a banking service that they want and are looking for,” said Hooper, who is now executive director at National Australia Group Europe (NAGE), with responsibility for the Yorkshire Bank brand.

“There’s no big change in the modus operandi or culture of the company, but it is operating in quite difficult circumstances.

“It’s harder to raise money, it’s more expensive to raise money to run a bank, the economy is difficult so it’s harder to make judgments about who to lend money to so we get it back and our depositors don’t turn up and find there isn’t any.

“All banks are struggling with how to generate profits which are attractive to investors in banks and I think that’s going to be an ongoing challenge which we all face and amongst all that you want to be improving, to be more efficient and have better customer service.”

Asked about the performance of Clydesdale and Yorkshire Banks, he responds in a matter-of-fact way.

“Historically, we have made a decent fist of it. If you look at our profits over the last three years they have declined from what they were in years prior to that.

“A challenge we have definitely got is in making sure we can generate returns for our shareholder.

“There is a bigger challenge faced by all banks about what the community wants from us.”

In other words, banks and bankers have what you could describe as a reputational issue. Hooper illustrates this by pointing out the window.

“Mention the word ‘bank’ to people in the street and ask them for the first three words that come into their head. Most of them you are not going to be able to write down for the newspaper.

“There is that issue about rebuilding trust in the community. It basically comes down to what do people think banks are there for?

“At the moment, a lot of people are there to enrich the people at the top of them.”

Is that a fair comment? “If you look at banking over the last 20 years, as with many of these comments, they are not without substance.”

Speculation has intensified over the last year that NAB wants rid of its UK operations. It rejected a £2bn offer from private equity firm Sun Capital for Clydesdale and Yorkshire Banks, and also held preliminary talks with NBNK about a possible offer.

Two credit rating agencies downgraded the banks last month, following doubts about the commitment of their Australian parent.

So what is going to happen with the ownership?

“If I was a betting man, I would say nothing,” straight-batted Hooper.

“There has been significant discussion in the Press about the assets Lloyds Bank is selling and whether we might have a part to play in that.

“From the point of view of our owner, it obviously has a valuable asset in the UK at the moment.

“It’s got a bank that could be a platform for further growth and it would be remiss if it wasn’t talking to parties who might be interested in joining with us to do that.

“The banking environment at the moment is sufficiently hard and difficult to predict. There’s going to be a lot more said than done.” Added Hooper: “There is no question that National Australia Bank values Clydesdale and Yorkshire Bank.

“It has constantly supported these banks, increasingly so over the last couple of years with equity when they have needed as regulations have changed and debt.

“I myself I suppose am an example of that support. I work for National Australia Bank, I have come over here.

“We have recruited and invested in systems over here and people in the UK. We have a really well embedded local management team now.

“It is undoubtedly the case though that if you were a shareholder in the National Australia Bank and you look at its sweep of businesses the UK is a lower earning business than any of the other ones, which probably irritates you.

“The UK economy has done significantly worse than the Australian economy over the last three or four years and if you were a betting man you would say that was probably likely to continue for the next three or four years.

“It doesn’t surprise me there’s a bit of grizzling from Australian shareholders. Our job is to make the bank relevant to its customers and restore its profitability.”

Running a regional bank that prides itself on its community credentials represents a departure for the 50-year-old, whose background is steeped in global investment banking.

After degrees in international relations at the London School of Economics and southern African studies at York University, an interest in international finance led him to join Kleinwort Benson as a graduate trainee.

He spent nine years with the blueblood merchant bank in London and California, learning the basics of investment banking, such as the source of money, the protection of banks against various forms of risk and how to tell a good borrower from a bad one.

He left in 1994 to join the London office of Henry Ansbacher, a South African-owned merchant bank, in the year that Nelson Mandela became president, when capital started to flow more freely in and out of the country.

Hooper had prior experience of South Africa: he spent a formative year between school and university working in a hospital in KwaZulu-Natal, as one of a handful of white staff among 100 Zulus in the era of apartheid.

He learnt about taking people as you find them and also something of the absurdities of life.

After two years with Ansbacher, the father of three joined NAB in London and went to Australia in 2002.

This year he took responsibility for the Yorkshire Bank brand, which he described as a privilege.

“It’s an organisation that has a lot to be proud of. We together with the rest of the banking world have a lot to do to rehabilitate ourselves in the communities we operate in.

“But Yorkshire Bank starts from a much better position than most other banks.”

John Hooper Factfile

Title: Director for Yorkshire Bank, Executive Director Clydesdale Bank

Date of birth: May 26, 1961

Education: BSc (Econ) Hons International Relations, London School of Economics; MA Southern African Studies, York University

First job: Graduate entrant Kleinwort Benson

Car driven: Jaguar XF

Favourite film: Apollo 13

Favourite song: U2 Stuck in the Moment

Last book read: Love Wins by Rob Bell

Favourite Holiday destination: Lake District and Apollo Bay in Australia

Most proud of: My wife and family for their commitment to the service of others.